What Type of Bitcoin Exchange User Are You?

When it comes to finding the Bitcoin exchange that suits individual users best, there is no such thing as a universal platform. Every Bitcoin user has their own preferences and needs, and no single platform can address them all. Some people lie dealing with intermediary exchanges, whereas others prefer peer-to-peer transactions. This type of diversity makes the Bitcoin ecosystem a great place, and all available options can peacefully coexist for the time to come.

Third-Party Services or Peer-to-peer Transactions?

In its original form, Bitcoin was never intended to be used through third-party service providers. Peer-to-peer interaction is the bread and butter of what makes digital currency vastly different from any form of value exchange, but that is not how it is most commonly used in this day and age.

Instead, most Bitcoin users tend to rely on third-party services providers to buy and sell the popular digital currency. Not that there is anything wrong with that per se, as it will take time for consumers to stop relying on third-party services and control their own finances at any given time.

Bitcoin allows anyone to store their digital currency on a device solely in their control, regardless of whether this is a computer, laptop, mobile device, or otherwise. At the same time, most people struggle with the concept of being fully responsible for their finances at all times, which is part of the reason as to why they prefer intermediary services.

However, this also presents a risk, as most Bitcoin exchanges will hold on to customer funds, either in fiat currency or Bitcoin. If anything were to happen with the exchange, getting one’s money back out could prove to be a major struggle. This is why people are advised to move funds in and out of exchanges as soon as possible, and never store in one of the platform’s wallets for an extended period of time.

Peer-to-peer transactions, on the other hand, are a different matter altogether. There is no third-party involved in the process at any time, and both the sender and recipient take the full responsibility for the Bitcoin transaction. Embracing this type of money transfer is part of the reason platforms such as LocalBitcoinshave become so popular all over the world.

ID Verification Remains A Key Focal Point

From an anti-money laundering perspective, traditional Bitcoin exchanges are more favorable to government officials, as there is always a paper trail involved in every individual transaction. The origin of the bitcoins can be traced, and exchanges have personal information about the person buying or selling as well.

Some people are more wary of sharing that information with third parties. This has nothing to do with criminal activity per se, as there are plenty of reasons to be cautious with personal information. ID Verification is an important aspect of buying and selling Bitcoin, but there is always a legal way around this process.

About The Author

JP Buntinx is a 30-year old FinTech and Bitcoin enthusiast living in Belgium. His passion for finance and technology made him one of the world's leading freelance Bitcoin writers, and he is working to achieve the same level of respect in the FinTech sector.